Correlation Between Western Acquisition and Arbor Realty
Can any of the company-specific risk be diversified away by investing in both Western Acquisition and Arbor Realty at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Western Acquisition and Arbor Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Acquisition Ventures and Arbor Realty Trust, you can compare the effects of market volatilities on Western Acquisition and Arbor Realty and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Western Acquisition with a short position of Arbor Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Arbor Realty.
Diversification Opportunities for Western Acquisition and Arbor Realty
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Arbor is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Arbor Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Realty Trust and Western Acquisition is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Western Acquisition Ventures are associated (or correlated) with Arbor Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Realty Trust has no effect on the direction of Western Acquisition i.e., Western Acquisition and Arbor Realty go up and down completely randomly.
Pair Corralation between Western Acquisition and Arbor Realty
Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 0.9 times more return on investment than Arbor Realty. However, Western Acquisition Ventures is 1.11 times less risky than Arbor Realty. It trades about 0.04 of its potential returns per unit of risk. Arbor Realty Trust is currently generating about 0.03 per unit of risk. If you would invest 1,021 in Western Acquisition Ventures on November 1, 2024 and sell it today you would earn a total of 379.00 from holding Western Acquisition Ventures or generate 37.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Acquisition Ventures vs. Arbor Realty Trust
Performance |
| Timeline |
| Western Acquisition |
| Arbor Realty Trust |
Western Acquisition and Arbor Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and Arbor Realty
The main advantage of trading using opposite Western Acquisition and Arbor Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, Arbor Realty can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Arbor Realty will offset losses from the drop in Arbor Realty's long position.The idea behind Western Acquisition Ventures and Arbor Realty Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Arbor Realty vs. Starwood Property Trust | Arbor Realty vs. Ready Capital Corp | Arbor Realty vs. Two Harbors Investments | Arbor Realty vs. AGNC Investment Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |